Business Rates

We are addressing a serious issue this evening—how businesses may get the best help possible through the recession, which has been sudden and in many instances relates to circumstances that changed rapidly last year. We should consider various types of help, a number of which have been mentioned. However, as hon. Members have pointed out, the Opposition chose to address not that wider issue, but the specific and narrow topic of business rates, which is one of the issues, but by no means the only aspect of support for businesses in a recession. The motion, concentrating on the business rate, states that""businesses have already been hit by five per cent. above inflation rises"." If one chooses to make the focus of the debate so specific, it is essential to have some answers to the questions that arise from such statements so that the debate can be taken seriously. If one says that businesses have been hit by above-inflation increases, one presumably has to say that it would be a much better idea if businesses were not hit by above-inflation increases, in which case one must presumably refer to the original legislation on business rates passed by the then Conservative Government, which stated that an retail prices index indicator should be put in place to determine business rate increases each year. The question then arises whether the solution is to change or abolish that legislation. Should there be no increases in business rates, or smaller increases? Both of those would require the original legislation to be changed. If one goes for no increases, one must answer a further question. Each year that formula raises about £1.3 billion in business rates, which goes towards the local government pot, so to speak. If that element is removed, one has to decide how the pot is to be replenished. Will the general taxpayer have to pay an additional grant towards the local government settlement, or if no one is to pay, will there be a cut of £1.3 billion in local government spending? One ought to be straight about that, if that is what is proposed. I have attempted to find some answers, and not just for the purposes of the debate. I listened carefully to the presentation from the hon. Member for Putney (Justine Greening), but I got no answers from that at all. Indeed, there was obfuscation about the proposals. I read an impressive-looking document entitled "Control shift—returning power to local communities", the Conservative policy on local government. It is a long document, 23 pages in 10-point type. In it there is not a word about business rate construction, how business rates might work in the future, whether the RPI formula would be adhered to or whether changes would be made to it. There is not a word about revaluation or how it might be changed. Revaluation has taken place every five years since 1990 and each time transitional arrangements have been put in place. There is one line about discretionary power to levy business rate discounts, and the document states that that can be given to local authorities""as long as they can fund them from other local income or avoided costs"—" that is, can they find the money from somewhere else, perhaps the council tax payer, or perhaps by cutting services? The document contains no answers. If it is decided not to change the legislation, deferring business rate increases is a logical step to take. Next year's RPI is likely to be negative, and businesses that know that will be able to decide whether they wish to smooth the increase out over a couple of years, take a greater discount now and a lesser discount later on, or go for no discount now and therefore receive a substantial decrease in their business rates for the following year. Businesses will make that logical move if they have the answers to the basic questions. If one does not know what is happening to the basic nature of business rates, and one appears to be unaware that the increase arrangements and transitional arrangements are enshrined in legislation and if one is unaware that revaluation is the basis on which one redistributes—and not increases—the pot, businesses will say other things. That is essentially what has happened tonight. There are real issues with the business rate, and I have concerns about port rates and empty property rates, too. I am very concerned about help for businesses in the recession, but an Opposition party that wishes to be the Government at some stage is misleading businesses and is not being straight with them if it purports to help businesses in the recession, but does not provide them with basic information about what it will do to stabilise their arrangements. Tonight has been a shocking missed opportunity to discuss the real issues. Instead, some Members have discussed a number of peripheral issues that, although important, not only do not constitute the whole issue of how we help businesses but serve to obscure the true lack of substance in Conservative policies on local government.